Thursday, April 26, 2012
The agency is owned by Russell Glenister, an industry veteran with over 25 years experience as well as the former owner of image100, a royalty free agency which was bought by Corbis a few years go.
We know we're entering a crowded and well established market but we have a lot of experience and we will be differentiating ourselves in a number of ways. Amongst other things, we have the Pocketstock Academy where we'll be helping teach people about photography, we have our Compass collection where professional photographers can sell their content at higher prices and we have a phone app which allows people to upload images directly to our site. In addition, we'll be opening an office in the US in the near future followed by one in Germany and our site will also be available in German.
We are gearing up for our sales launch at the end of May/beginning of June and there will be quite a few developments in the period leading up to this but we hope that contributors will see that we're not just another agency doing the same as everyone else.
Open Letter from Russell Glenister
Why are so few new agencies making a success of selling your images?
My sole objectives with this open letter is to get a debate going across all the microstock blogs and forums and to help raise the profile of my new business, Pocketstock.
I have no issue with any of the organizations I refer to indirectly, we all have our ways of doing business and making money, some just don’t necessarily help the overall development of an industry or sector.
Firstly, I’d like to take this opportunity to introduce Pocketstock and myself, Russell Glenister. I have been in the stock photography industry for over 25 years. I started out as a lead creative at Tony Stone Images. For those of you not old enough, Tony Stone Images (TSI) was purchased by Getty Images, the industry leader and very much led the gold rush which has culminated in the stock photography industry we see today. I have continued to work in this fine industry for all years since departing from TSI, working with all the major players along the way, usually as part of the supply chain.
Pocketstock is my new business, having sold my last one to the other major traditional stock agency, Corbis, a few years back. Pocketstock wants to take stock photography to a new level, open the market up to a new supply chain, through video education – The Pocketstock Academy, which is being launched as I write this letter. We are just about to start selling and marketing our content, in the process of taking in footage and music along with the images, illustrations and vectors we already have.
We are also well advanced, as part of our international development, in opening up in USA. Germany will follow. We hope to grow quickly – don’t we all!
We would like to help keep prices up to a reasonable level and have opened up Compass for those who want to see their images sold at much higher prices that microstock agencies traditionally has.
Now, I’ve always liked this industry, otherwise I wouldn’t have stayed around for as long as I have – nor taken on this task! I am not someone who doesn’t like change, so the introduction of microstock has in my view added quality and quantity to a largely flagging industry – too many production houses (image100 was the first to set up a wholly owned content model, much copied over time) producing the same types of images with limited distribution: Getty and Corbis having bought most all the decent image producers.
I see an industry that is changing, maturing, settling into a pattern that could determine how things pan out for both supplier and aggregator over the coming years.
I must admit I am worried. I am concerned for the supplier, you guys and I am equally concerned for the aggregator, us. I am going talk about what is and what I feel could happen in our industry over the coming years. I will name no names, but I am sure you will be able work out who I am talking about. I will leave that to you.
I will now highlight the issues and some of my suggested solutions. I’d like you guys to give your thoughts too.
Who’s new and making money?
Over the past four years there has been only one major addition to the microstock aggregating business. They have achieved a lot since they started out a couple years back and done well. What this success is largely based on though is low prices. Does that help you make money? How much more traction can they make by offering content below, what I believe is fair, market value?
It’s a tough industry to get into; there are the leaders, four of them. One, way out in front, followed by a rising subscription based agency. These two are a clear distance ahead of another two – one may be on the decline, maybe not?
After this, we have around another five or so who make up most of your sales outside the big four. That’s not rocket science.
Aggregator of what?
How do new aggregators get traction then, other than by undercutting on price – that is if they can get the content in the first place?
It’s not easy, as it has to be a long game play, which costs money – a lot of it. When I sold image100 we had 40,000 images, now that number is a drop in the ocean. The new 40,000 (which was a large number 15 years ago), is, at least 5 million.
It takes a lot of money to get 5 million images into your collection without going down an API route. It’s not just about images; it’s about getting the right images. You guys have put your images through a lot of aggregators and many of them have made no money – that then means you run out of patience, you wait for the other guys to tell you about their success with new agency x before you make the plunge with that agency. That then makes it difficult for the agency to make money. Without money, they can’t market and you make nothing, it becomes a treadmill for everyone.
But, without content suppliers support no new agency can flourish.
There are a few agencies offering this service, one or two that are trying control this area, that are getting very greedy. They make it very attractive, except on margin (where they try squeeze the life out of everyone) for new agencies to get into their API system, they then try control distribution and of course they are trying control the supply too (that’s you!).
API is, on the whole, bad for you.
If Pocketstock signed an API deal, which we won’t, you will see such a small amount from each sale, it doesn’t seem worth allowing it in the first place. We won’t do that to you, nor ourselves – I can’t disclose the numbers publically, unfortunately, but you’d be shocked.
Stock Photography is not a financially growing industry; footage will grow, but by how much? We don’t know. There are no more clients today than their were two years ago, so if you:
A Allow your images to be sold very cheaply, then you are losing money – the client would buy them from somewhere else for a higher price, surely. Do they worry about spending $8 over $4, let me tell you, largely, they don’t. Cheap images versus higher priced RM and RF from years gone by, drove this market upwards, but it’s going sideways now, so lowering the prices will not bring in any significant increase in buying clients – it’s bottomed out.
B Allow your images to be sold through API, you lose again. Businesses like us will never be able grow if you allow agents to offer your images in their API deals without offering them to new aggregators too – it’s tempting for new entrants, like us, to want to participate, but we won’t.
We haven’t because we are well backed, in it for the long haul and know that we need to develop relationships with the suppliers, not one greedy API supplier, who can then control Pocketstock, you and a large part of the industry too.
C Once these guys have multiple APIs in place, you lose, as the competition is suppressed and from that, pricing and royalties can be controlled. That control will not be to your liking, that’s for sure.
This is a good time to talk about royalties. Yet again one of the biggish agencies, gets to a certain size and then decides to cut the royalties offered to you guys. Is that the right way to run a business? We think not.
At Pocketstock we usually offer 30% as a starting rate (rising to 40%), but have a special offer on, whilst we build content in the early days, of 40%, because, that is what we know we can afford to pay out. We have no intention of cutting your royalty rate, it’s just not the way business should be done and we won’t do it.
If you would like to take up this offer, you must email Tavis@pocketstock.com and get a unique 40% code – all images will then earn 40% royalties forever.
Are they paying?
Now, as I said some agencies offer 50% and then retract that, others just offer 50% and then don’t pay – they can’t afford it. The industry has seen one case in the past year and I can tell you there are others who are likely not reporting correctly too and this number could grow. How can you spot an agency that you should support? Cathy Yeulet of Monkey Business gives a couple insights here:
We all need your support
Finally, we new businesses all need the support of the content providers. No supermarket can flourish without the right food to sell and no stock agency can make a living unless the content providers back them. I know it’s the chicken and egg scenario, without supply we can’t sell, without sales you’re not convinced. However, in my view if you don’t support new agencies, the trusted ones, that look to have promise, then you open yourselves up to:
A A stagnant distribution network
B APIs and the reduced margins they give you
C Reduced margins from agencies lowering their royalties, and
D The risk of being controlled by a few powerhouses.
Do you want that? Is this the future? Please debate.